26.07.2018

Cliff edges and parachutes

The Brexit crisis is deepening and almost anything can happen, writes Eddie Ford

Though some might complacently dismiss it as just another operation by Project Fear, there is reasonable speculation that a no-deal could see up to a million workers or more lose their job as the UK suddenly finds itself trading under World Trade Organisation rules - slapping 10% tariffs on UK-made cars, up to 50% on dairy products, and so on. Indeed, the Dairy UK chairman, Paul Vernon, told the environment, food and rural affairs select committee in 2016 that a no-deal would effectively annihilate the dairy industry.1 And the food sector in Scotland too, which is responsible for around £1 billion worth of exports each year mainly to other EU countries, has talked about the “terrifying” consequences - the industry could be “close to wiped out” unless new trading terms are in place on the day the UK leaves the EU.2

As we are beginning to find out, companies and the government are stockpiling essential supplies like foods and medicines now. Testifying to the Brexit select committee on July 24, Dominic Raab, the hapless Brexit secretary, finally admitted that the government is taking steps to ensure that there are “adequate” food supplies for Britain to cover the eventuality of a no-deal departure - though, of course, it would be “wrong” to “describe it as the government doing the stockpiling”. Yes, if you say so, Dominic. On the same day the new health secretary, Matt Hancock, perhaps not hearing what Raab had said, told MPs that the department of health and social care is working with industry to stockpile various drugs and medical devices. Naturally, Hancock was “confident” that a deal could be reached in time, but added that it was “responsible” to prepare for a range of outcomes. Reassured now?

In other words, contingency plans are being urgently drawn up by virtually every governmental department and agency. It is surely no accident that Theresa May declared on July 24 that from now on she is personally taking “control” of negotiations, with the Europe Unit led by senior civil servant Olly Robbins having “overall responsibility for the preparation and conduct” of EU talks - Raab has been sidelined before he even had the chance to get his feet warm under the table. The reckless David Cameron, of course, never drew up any contingency plans when prime minister, as it never occurred to him that the referendum could be lost - no wonder he has virtually disappeared from public life. Philip Hammond, the chancellor, has already set aside £3 billion for contingency planning - that sum is bound to go up, putting a hole in the budget.

Quite extraordinarily in some respects, though logically in other ways, the government is now openly talking about turning a 10-mile stretch of the M26 in Kent into a “lorry park” to help cope with tailbacks from Dover if customs checks have to implemented by the EU - up to 10,000 lorries a day pass ‘frictionlessly’ through the port. There have also been suggestions that the ministry of defence is looking into how the armed forces could be deployed to carry out various civil functions, including using RAF planes to transport food supplies across the country. Showing you the potential scale of the problem, the UK imports just over 50% of its food, mainly from the EU - with 90% of it going through Dover.3 Various EU countries are now actively planning to hire more customs officials to handle the anticipated post-Brexit backlog, the Financial Times estimating that the UK will need up to 5,000 new customs officials to cope with a no-deal scenario - on top of the extra 3,000 that are already been employed.

Adding to the tense atmosphere, Amazon’s viciously anti-union and tax-dodging boss in the UK, Doug Gurr, has warned that Britain would face “civil unrest” within weeks of a no-deal Brexit - though obviously a huge degree of self-interest is served by issuing such dark prophecies. He does not want to see a dent in his profits. Nevertheless, it would be foolish to treat his comment as entirely fanciful - same goes for Tory MP Dominic Greave, the pro-EU rebel who never was, telling Sky News that a no-deal Brexit would leave the country in “a state of emergency”, as basic services might no longer be available.

With perfect timing, Jacob-Rees Mogg - who heads the European Research Group of Brexit ultras - has confessed that we will not know the full economic consequences of Brexit “for a very long time”. When repeatedly pressed on this point, Mogg said the “overwhelming opportunity” for Brexit will be “over the next 50 years” - not exactly a comforting thought for us mere mortals.4 A few months ago, Mogg warned about “perpetual purgatory” when May reluctantly signed up to the EU’s ‘backstop’ plan to avoid a hard Irish border. Now, however, Mogg seems to be envisaging 50 years of “purgatory”.

Don’t panic

Clearly, the Brexit crisis is deepening and almost anything can happen when MPs return from their summer holidays in September - if not earlier. William Hill is giving 7/4 odds of a general election in the autumn and 9/4 odds for next year.5 There is near permanent talk of a leadership bid, as our readers know, but what that would achieve is hard to see, given that any new Tory leader would face exactly the same problem as Theresa May - a divided party, the same unfavourable parliamentary arithmetic and an EU playing hardball.

Having said that, there is no panic yet. May obviously has no interest in promoting Project Fear, which is essentially aimed at getting a second referendum - something that she has totally ruled out, and there is no special reason to believe that she is being duplicitous or dishonest. The prime minister is not trying to get us to go to the next People’s Vote march or a sign a petition demanding another referendum. No, all this recent talk of contingency planning is intended to reassure business that ‘measures are being taken’. Business, needless to say, wants the softest deal possible - preferably no Brexit at all. Thus it has become increasingly alarmed by the way things appear to be developing. Capital broadly welcomed May’s Chequers plan and subsequent white paper for a “common rule book” with the EU, seeing it as an opening gambit in terms of negotiations. But there is always the possibility that the EU rejects the plan, or Theresa May refuses to compromise. Then talks break down - the nightmare scenario.

We are now not far away from the March deadline. But a last-minute deal, as happens so often with the EU, would be too late for business - at the very latest it needs need to know what is going on by December, or it will start to take emergency decisions (ie, relocate out of Britain). So far the government has drafted 70 “technical notices” that will be sent to companies and households over the summer to help them prepare for a no-deal. Remember - don’t panic. When you consider May’s wafer-thin majority in parliament, support for these “notices” is by no means guaranteed - quite unlikely actually. Then what the hell happens? No-one knows, but if you are a capitalist you need to know - or you will set up shop elsewhere if you can.

Interestingly, the EU has just signed a massive free-trade deal with Japan - you might have noticed how many Japanese firms there are in Britain making cars. Now, it might be that British car plants and their workers are so efficient - or the transport links are so brilliant - that these Japanese-owned companies can make cars cheaper in the UK than in Japan. But if not, they will simply close down your British operations and make them in Japan instead, then ship them over to Europe with no tariffs to pay - bit of a no-brainer really.

Meanwhile, the representatives of capital have had another get-together with the government on July 20 at Chevening House. Doubtlessly there are ‘rogue’ sections of the capitalist class - like Tim Wetherspoon and hedge-fund managers - who think that a hard Brexit would be marvellous. But those present at Chevening consider such an outcome as potentially catastrophic. The Confederation of British Industry, the Federation of Small Businesses, Institute of Directors, BMW Mini, Barclays, Santander, Shell UK, Amazon UK, US-owned Morrisons, Lloyds of London, National Grid, etc are all singing from the same hymn sheet - either the softest of softest Brexit or no Brexit. They want to remain within a customs union and single market.

This is why the likes of the FT have repeatedly pointed out the central contradiction now at play in the whole Brexit saga. Here you have the historic ‘party of business’, the Tories, which is no longer serving the interests of business. Yes, there are legal reasons for this - since 2000 a company wanting to make a donation to the Conservative Party would need the agreement of shareholders. But the central reason is that at least half of the FTSE 100 companies are owned abroad - ie, transnationals - and therefore do not have the same relationship to the Tories as Uk capital did in the 1950s and 60s.

Consequently, we get a lot of contradictory rhetoric from those saying we cannot just close the doors - hence we need an ‘open and controlled’ system of immigration. But how can it be ‘open’ and ‘controlled’ at the same time? Yet the immigration system has to have the “trust” of the British people - in other words, come out with some flowery phrases that satisfy - or hoodwink - them. Anything to get a very soft Brexit that still serves the interests of business (even if it is not as good as the status quo).

Realignment

Last week, upping the stakes, we saw the latest move from ‘Project delegitimise the June 23 referendum’. Vote Leave, the official Brexit campaign fronted by Boris Johnson and Michael Gove, was fined £61,000 after an electoral commission probe said it broke electoral law - exceeding its £7 million spending limit by funnelling £675,315 through the pro-Brexit youth group, BeLeave. As for the founder of BeLeave, Darren Grimes, he has been fined £20,000 and referred to the police, along with another Vote Leave official, David Halsall. MPs from all parties were especially outraged when Vote Leave’s director, Dominic Cummings, refused to appear before the digital culture media and sports committee - saying lawyers had told him to “keep my trap shut” until the EC completes its investigation into Vote Leave this summer.

What was noticeable about the scandal was the extremely well-coordinated nature of the attacks on Cummings/Vote Leave. This reminded me of the ‘anti-Semitism’ slander campaign against the Labour Party and Jeremy Corbyn - one story after another hitting the headlines almost like clockwork. Last week, we also had John Major doing his bit for ‘Project Delegitimisation’, arguing that there was a “moral case” for another referendum - Vince Cable joined in as well, naturally enough. Furthermore, some within Labour and the Tory Party have been calling for a government of ‘national unity’ - or at least raised the prospect, perhaps to see how much support it gets.